The field of the invention relates generally to enhancing computer messages in payment processing systems, and more particularly to receiving transaction messages, applying stored rules to data contained in the transaction messages, and enhancing the transaction messages with interchange rate information obtained by applying the stored rules.
Payment cards are a convenient and easy way for a merchant to accept payment from cardholders for goods and services provided by the merchant. Processing of payment card transactions generally requires involvement by various entities and institutions including the merchant's acquiring bank, the payment processor associated with the payment card, and the cardholder's issuing bank. As a result, merchants are generally charged fees for accepting payment card transactions which may be divided among the acquiring bank, the issuing bank, and the payment processor for the services they provide.
Interchange fees, for example, are applied to each payment card transaction and are generally paid by the merchant to the cardholder's issuing bank. Interchange fees are generally intended to reimburse the issuing bank for the cost of providing payment card services and processing payment card transactions. Interchange fees are also intended to cover the inherent risk in the issuing bank's role in a payment card transaction. Specifically, the issuing bank provides funds to the merchant on credit to the cardholder under the assumption that the cardholder will repay the issuing bank when the cardholder's payment card statement comes due. Accordingly, interchange fees are intended, at least in part, to cover the possibility that a cardholder will fail to or be unable to reimburse the issuing bank.
Interchange fees are generally assessed based on an interchange rate which may be one or both of a percentage of a transaction and a flat fee. The interchange rate for a particular transaction may vary significantly based on characteristics of the transaction. Transaction characteristics that may influence the interchange rate include, but are not limited to, whether the payment card transaction was made with a debit or credit card; the amount of the transaction; the nature of the goods and services purchased; whether the transaction was conducted online or at a brick and mortar location such that the payment card was physically presented; the payment program or service enrolled in by the merchant; whether the transaction was processed entirely electronically; and the location of the transaction (e.g., domestic or international).
In known systems, the process of determining an interchange rate is commonly referred to as interchange qualification and generally occurs during a transaction clearing process. During interchange qualification, an acquiring bank analyzes transaction data for a given transaction and determines an applicable interchange rate. The acquiring bank generally performs interchange qualification using a specialized interchange qualification computing system configured to apply rules to determine the applicable interchange rate. The rules are typically created by the payment processor of the issuing bank. After the acquiring bank determines the appropriate interchange rate, the acquiring bank adds an interchange rate designator (IRD) corresponding to the interchange rate to the transaction data. Based on the IRD, the payment card processor and/or issuing bank determine which interchange rate to apply and the amount to which the payment processor or issuing bank is entitled during a settlement process.
Known systems and methods for processing interchange fees present various problems and inefficiencies. An acquiring bank may err when identifying or inserting an IRD. For example, the acquiring bank may insert an invalid IRD, insert an incorrect IRD, or, in cases where a particular transaction may meet criteria for more than one IRD, insert an IRD corresponding to a higher interchange rate than is required. As a result of such errors, a merchant may be assessed greater fees than necessary or may have transaction data rejected. If transaction data is rejected, correcting and reprocessing the transaction data may require significant time and network bandwidth, leading to unnecessary costs for the acquiring bank.
In known systems in which acquiring banks perform interchange qualification, each acquiring bank must maintain its own system for analyzing transaction data including one or more systems for storing, updating, and applying interchange qualification rules. Moreover, payment processors frequently introduce new payment card products, cease offering payment card products, adjust interchange rates, and the like, each of which may require updating an acquiring bank's interchange qualification system. Accordingly, acquiring banks and institutions seeking to become acquiring banks are subject to significant capital investments and operating expenses to establish, maintain, and operate interchange qualification systems.
In known systems payment processors must also regularly disseminate interchange rate schedules to acquiring banks describing the transaction characteristics applicable to different interchange rates. Given the broad range of payment card products offered by payment processors and the number of acquiring banks that may be in a payment processor's network, even minor changes to an interchange rate schedule may require significant bandwidth and time to disseminate. Moreover, even if an updated interchange rate schedule is disseminated to an acquiring bank, there is no guarantee that the acquiring bank will update its interchange qualification systems correctly and in a timely manner.
In light of the above, a new system and method for processing interchange rates in a payment processing network is needed that resolves the inefficiencies and negative implications of known systems in which acquiring banks conduct interchange qualification.